Mergers and the Supersizing of Business ; Revival of Acquisitions Is Driven by Healthier Stock Market - and Spurs Consolidation of Industries

By Ron Scherer writer of The Christian Science Monitor | The Christian Science Monitor, October 3, 2003 | Go to article overview

Mergers and the Supersizing of Business ; Revival of Acquisitions Is Driven by Healthier Stock Market - and Spurs Consolidation of Industries


Ron Scherer writer of The Christian Science Monitor, The Christian Science Monitor


Mergers, megamergers and empire-building corporate weddings are back in vogue on Wall Street.

Almost every day, there is news of some new billion-dollar combination: banking, healthcare, and tobacco in just the past few days.

Behind the new surge in acquisitions is a much healthier stock market. Since the beginning of the year, stock prices are up between 15 and 20 percent. This has given companies the means to snap up competitors - some weakened by an economic downturn.

The furious dealmaking is part of a larger trend in American business life: the consolidation of whole industries. National companies snap up regional companies, with Bank of America buying Fleet Bank this week for $43 billion in stock. Rivals join forces to take on bigger fish - such as RJ Reynolds buying Brown & Williamson's tobacco division this week to compete against Altria's Philip Morris brands. Chief executives play chess with their company's accounts.

Call it the Supersizing of America.

"I think it's largely driven by the economies of scale inherent in global communications and systems," says Don Straszheim of Straszheim Global Advisors in Los Angeles.

It's not hard for Americans to find examples of this consolidation in their own lives. Four packers sell over 70 percent of all the beef bought in the US. Only two companies in the world make commercial jets. Three wholesalers control over 90 percent of the distribution of drugs. Three companies control almost 80 percent of the confectionary market.

The increased consolidation has prompted fairly intense antitrust reviews in Washington, says Jon Dubrow, an anti-trust partner at McDermott, Will & Emery in Washington. "They don't look at size. Big is not necessarily bad," says Mr. Dubrow. "The question is who will remain to constrain the company after the merger," says Dubrow, who says the Bush administration is as aggressive on antitrust as the Clinton administration.

Despite fewer competitors, many experts dismiss fears of monopoly control. "Most of the time, new competitors pop up," says David Wyld, a business professor at Southeast Louisiana University.

FOR example, today only a handful of grocery stores distribute most food. Yet 15 years ago, a new competitor entered the business - Wal-Mart. Today, the Bentonville, Ark., chain sells 19 percent of the groceries bought in the US.

"What has happened is that consolidation has led to incredible competition," says Adam Fein, president of Pembroke Consulting in Philadelphia. "Wal-Mart is now considering selling groceries in California, and the retailers there are figuring out how to compete. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • A full archive of books and articles related to this one
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Mergers and the Supersizing of Business ; Revival of Acquisitions Is Driven by Healthier Stock Market - and Spurs Consolidation of Industries
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

    Already a member? Log in now.